Cyprus AIFM License 2026: Authorisation, Capital & the CySEC Process

Cyprus has become one of the EU's fastest-growing fund jurisdictions, and behind almost every Cyprus fund sits an Alternative Investment Fund Manager. Whether you need a light-touch registration or a full authorisation turns on one number — your assets under management — and on whether you want the EU passport. This guide sets out the two regimes, the capital, the CySEC process, and what changed when AIFMD II landed in 2026.Alternative Investment Fund Managers Law L.56(I)/2013

Zeno is not a law firm; it coordinates independent Cyprus Bar advocates and ICPAC-licensed accountants who handle the CySEC filing, the regulatory business plan and the ongoing compliance. For the fund vehicles an AIFM actually runs, read this alongside our Cyprus AIF and RAIF fund setup guide.

What is an AIFM licence in Cyprus?

An AIFM is the regulated entity that manages one or more Alternative Investment Funds — performing at minimum portfolio management and risk management. In Cyprus the activity is governed by the Alternative Investment Fund Managers Law L.56(I)/2013, which transposes the EU AIFMD, and is supervised by the Cyprus Securities and Exchange Commission (CySEC).

The AIFMD framework regulates the manager, not primarily the fund. An AIFM can be set up as an external manager appointed by the fund, or a fund can be internallymanaged and act as its own AIFM. Beyond the two core functions, an authorised AIFM may also provide administration, marketing and activities related to the fund's assets, and can be permitted to offer ancillary MiFID-type services such as discretionary portfolio management.AIFMD (Directive 2011/61/EU), Annex I

This is a different licence from a Cyprus Investment Firm (CIF), which provides MiFID investment services to clients rather than managing collective investment vehicles — see our companion CIF / CySEC licence guide for that route.

Sub-threshold or full authorisation — which do I need?

If your total assets under management stay below €100 million including leverage, or below €500 million where the funds use no leverage and lock investors in for five years, you can operate as a "sub-threshold" (registered) AIFM — lighter obligations, but no EU passport. Cross either line, or opt in for the passport, and full authorisation applies.

The thresholds come from Article 3(2) of the AIFMD: €100 million where the portfolios include leverage, or €500 million where they are unleveraged and have no redemption rights for five years from initial investment. Sub-threshold managers still register with CySEC and file periodic reports, but escape the full capital, depositary and remuneration rules. The catch is decisive for most fund promoters: only a full AIFM gets the EU passport, so a manager that wants to raise capital across the EU generally opts straight into full authorisation.AIFMD (Directive 2011/61/EU), Article 3(2)

How much initial capital does a Cyprus AIFM need?

An external AIFM needs €125,000 initial capital; an internally-managed fund acting as its own AIFM needs €300,000. Where managed assets exceed €250 million, additional own funds equal to 0.02% of the excess apply (capped so the total need not exceed €10 million), and own funds must never drop below a quarter of the previous year's fixed overheads.

• €125,000 — base initial capital for an external AIFM.
• €300,000 — where the AIF is internally managed.
• +0.02% of AUM above €250m— additional own funds, subject to the €10 million overall cap.
• Professional risk cover— to cover professional liability, an AIFM holds either additional own funds of 0.01% of AUM or qualifying professional indemnity insurance.
• Fixed-overheads floor— own funds always at least one quarter of the prior year's fixed overheads.

These are the harmonised AIFMD Article 9 figures, transposed by the Cyprus AIFM Law; capital must be held in liquid or readily convertible assets and evidenced to CySEC as part of the application.AIFMD (Directive 2011/61/EU), Article 9

How does the CySEC application actually work?

You incorporate a Cyprus company, assemble a regulatory application — business plan, capital evidence, governance, risk-management and compliance frameworks, and fit-and-proper questionnaires for directors and shareholders — and submit it to CySEC, which assesses the entire package before granting authorisation.

1. Incorporate the management company (see the general company registration guide) and arrange the initial capital.
2. Build the substance: at least two qualified executive directors resident in Cyprus (the "four-eyes" principle), independent non-executives, and physical office presence.
3. Draft the core documents — programme of operations, business plan, and the risk-management, valuation, liquidity, compliance, internal-audit and remuneration policies.
4. Complete personal questionnaires establishing that controllers and managers are fit and proper.
5. Submit to CySEC with the application fee, respond to review rounds, and appoint a depositary before launch.

The whole file is submitted under, and assessed against, the AIFM Law and CySEC's directives; because it is document-heavy and judgement-based, most applicants run it with Cyprus advocates and regulatory accountants rather than filing alone.Alternative Investment Fund Managers Law L.56(I)/2013

How long does authorisation take?

CySEC has a statutory period of three months from a complete application to grant or refuse authorisation, which it may extend by up to a further three months where the circumstances justify it. Realistic end-to-end timing, including preparation and clarification rounds, is roughly six to nine months.

The three-month clock only starts once CySEC treats the application as complete, so front-loaded, high-quality documentation is what actually compresses the timeline. The biggest delays come from thin business plans, unresolved fit-and-proper questions, and unclear substance arrangements — not from CySEC's statutory windows.AIFMD (Directive 2011/61/EU), Article 8

What does AIFMD II change in 2026?

Directive (EU) 2024/927 (AIFMD II) had to be transposed into national law across the EU by 16 April 2026. It tightens delegation and substance rules, mandates liquidity-management tools for open-ended funds, creates a harmonised regime for loan-originating funds, and expands supervisory reporting — so new Cyprus AIFMs build to this standard from day one.

The headline changes for a Cyprus applicant: managers must justify and document any delegation so they are not deemed "letter-box" entities; open-ended funds must select liquidity-management tools from a harmonised list; loan-originating funds face leverage limits and risk-retention rules; and reporting to regulators becomes more granular. Existing managers benefit from transitional provisions for some requirements, but the direction of travel is more substance, not less.Directive (EU) 2024/927 (AIFMD II)

How does an AIFM pair with a RAIF?

A Registered Alternative Investment Fund (RAIF) is not licensed by CySEC itself — it is regulated through its manager, which must be a full external AIFM. This pairing is Cyprus's fastest route to market: the AIFM registers the RAIF with CySEC within one month of incorporation, and the fund can launch once CySEC confirms it is on the special register.

Because the RAIF relies on the manager's existing authorisation, no separate fund licence is issued; CySEC simply verifies that the AIFM's permission covers the RAIF's investment strategy and adds it to the register — a process it completes within roughly one month of receiving complete documentation. That is why promoters often pair a fully authorised AIFM with one or more RAIFs rather than seeking authorisation for each fund. The mechanics of the RAIF vehicle are covered in the AIF and RAIF setup guide.Alternative Investment Funds Law L.124(I)/2018

How is a Cyprus AIFM taxed?

An AIFM is an ordinary Cyprus tax-resident company: management fees are taxed at the 15% corporate income tax rate that applies from 1 January 2026, with fund-management services generally exempt from Cyprus VAT. Fund vehicles and investors have their own treatment, which is where the structuring value largely sits.

The management company's profits fall under the reformed 15% corporate income tax from 2026, and management of qualifying funds is typically a VAT-exempt financial service. Non-Cyprus investors are generally outside Cyprus tax on fund income and gains, and Cyprus levies no withholding tax on outbound dividends to non-resident investors. The detailed exemptions depend on the fund vehicle and the investor mix, so model the tax on the fund and the manager together rather than in isolation.Income Tax Law N.118(I)/2002 (as amended for 2026)